The Supreme Court of India, in M/s Mangalam Publications, Kottayam v. Commissioner of Income Tax, Kottayam (2024 INSC 53), examined the legality of reopening completed assessments under Section 147 of the Income Tax Act, 1961, pursuant to issuance of notice under Section 148. The core issue before the Court was whether reassessment proceedings initiated beyond four years from the end of the relevant assessment years were sustainable in law, particularly in the absence of any failure on the part of the assessee to make a full and true disclosure of material facts.

The Court noted that the original assessments for the relevant years had been completed under Section 143(3) after due scrutiny. The reassessment was initiated primarily on the basis of a balance sheet obtained from a bank, which had already been held to be unreliable in earlier appellate proceedings. No fresh tangible material had come into the possession of the Assessing Officer subsequent to the original assessments.

Reiterating the settled legal position, the Supreme Court held that reassessment cannot be initiated on a mere change of opinion or on reappreciation of the same material already considered during original assessment. The Court emphasized that once the assessee has disclosed all primary facts necessary for assessment, the responsibility shifts to the Assessing Officer. The proviso to Section 147 clearly bars reopening beyond four years unless there is a failure on the part of the assessee to disclose fully and truly all material facts.

Relying upon authoritative precedents including CIT v. Kelvinator of India Ltd. (2010) 2 SCC 723, Phool Chand Bajrang Lal v. ITO (1993) 4 SCC 77, Srikrishna Pvt. Ltd. v. ITO (1996) 9 SCC 534, and Calcutta Discount Co. Ltd. v. ITO (1961) 41 ITR 191, the Court concluded that the reassessment proceedings were without jurisdiction and unsustainable in law.

Accordingly, the Supreme Court set aside the judgment of the High Court and restored the order of the Income Tax Appellate Tribunal, holding that the reassessment proceedings were barred by limitation and founded on impermissible change of opinion.

SOURCE LINK

https://api.sci.gov.in/supremecourt/2010/25389/25389_2010_7_1501_49749_Judgement_23-Jan-2024.pdf

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